Recently, Google has faced several challenges, the first being the delay of the Gemini 3.5 Pro model. The second is that outstanding AI talents are being poached due to higher income and options. Thirdly, some institutions predict that capital expenditures will slow down, far below the full year guidance of $180-190 billion. So tonight's post market earnings report from Google seems so important! Google is currently the earliest cloud service provider to announce financial reports, and its capital expenditure determines upstream companies like GPU and Nvidia, HBM， The life and death power of core suppliers such as optical modules, power, liquid cooling, etc. In addition, the revenue situation of cloud services directly determines investors' expectations for Google's input-output ratio! So Google's financial report should be in line with upstream suppliers and investors of all sizes, and its data will be crucial! I will focus on three key points in Google's financial report: first, poor market expectations, second, cloud service growth rate, and third, capital expenditures! As is well known, the recent performance of Google's stock price has not been satisfactory. Last night, the Nasdaq 100 index rose sharply, but it fell slightly, which is abnormal. Regardless of which company's stock price rises or falls after the release of its financial report, it is essentially a market reaction of poor expectations. one ️⃣ Poor market expectations The expectation gap in the investment market is often divided into three levels: The first layer (management guidance): the company's own performance expectations. Second layer (seller consensus): The average forecast given by Wall Street securities analysts. The third layer (buyer's code): the "invisible threshold" in the hearts of institutional fund managers who truly make the payment. The most outrageous aspect of Google this time is that the buyer's expectations are surprisingly high. The expectations of the seller and management for the growth rate of cloud business are generally around 64%, but the internal expectations of this group of buyer institutions have been pushed up to 70%~80%+! This is equivalent to raising the threshold by nearly 20 percentage points. The market's optimism towards Google Cloud has been fully expressed, which is both a driving force and a very high standard. two ️⃣ The double-edged sword of cloud service growth rate and computing power The reason why Google Cloud can achieve such an exaggerated growth rate is due to a very direct business logic, which is to lease computing power to external customers on a large scale to quickly monetize. But this brings a side effect: The model iteration has slowed down, and computing power has been given priority to tenants. The resources left for training top models such as Gemini are relatively limited. Coupled with industry talent competition, Google's AI model updates continue to slow down. My personal intuitive feeling is that I often use Gemini for industry research. Recently, the data in my long article often produces illusions and requires multiple models to verify each other multiple times, which is very troublesome. Moreover, Gemini has been consistently declining in the AI rankings, which is the key reason for the delay of the 3.5Pro. If Gemini cannot update and iterate to solve these bugs, I believe many people will give up Gemini's renewal like me! Tonight's after hours financial report can verify: how long can Google's strategy of "selling computing power to make money" last? Will customers start reducing renewals because the underlying model is not absolutely leading? three ️⃣ Is CapEx fanaticism or panic? Capital expenditure is the lifeline of the semiconductor and hardware industry chain, and the second absolute highlight of market attention. The market expects Google's investment in AI to remain extremely large. From Google's recent actions of raising funds through multiple channels such as issuing bonds and equity financing, it is highly likely that this money will continue to be invested in CapEx, and the investment growth rate will not slow down. However, some institutions still doubt whether there is a positive correlation between high capital expenditure and computing power due to the influence of China's Kimi K3, and with the recent continued delay of Gemini 3.5 Pro, the slowdown in capital expenditure may be the reason for the model delay. For investors, the most ideal upward trend The status is: Cloud service revenue exceeded expectations and CapEx maintained reasonable high-speed growth. Exceeding expectations in income proves that the money invested can be recovered and profits can be realized; CapEx dares to continue investing, which proves that the company has strong confidence in future profits, abundant demand, and directly benefits the semiconductor industry chain. On the contrary, if CapEx's expenses soar too far and its revenue cannot keep up, shareholders will worry about the ROI input-output ratio; If CapEx suddenly slows down, the bull market sentiment in the entire AI hardware sector will be hit. Overall, in the short to medium term, Google's financial report is crucial. Currently, Buffett has invested, so there shouldn't be any major issues in the long term. And in the video interview, Buffett personally admitted that this was an investment he personally handled, hoping that this financial report can bring some surprises!